Heineken Could Revise Its Bid For Tiger Beer Brewer

According to sources, the world’s third-largest brewer, Heineken N.V. (AMS:HEIA) (PINK:HINKY), could revise its earlier bid, for Asia Pacific Breweries Ltd. (SGX:A46), of $6 billion, by another 10 percent, conditional on F&N not accepting a partial Thai offer. The Dutch brewer’s latest bid could match the partial offer by the Thai group, of $55 per APB share.

Heineken N.V. (AMS:HEIA) (PINK:HINKY) had earlier offered $50 per share for the 58 percent stake, which it does not already own. Out of 58 percent 40 percent is held by Heineken long-time partner Fraser and Neave Limited (SGX:F99), a drinks and property conglomerate. But the efforts of the Dutch brewer had been marred earlier by Charoen Sirivadhanabhakdi, Thailand’s second-richest man, who also wants to acquire the maker of Tiger beer, to expand his Thai Beverage Public Company Limited (SGX:Y92) empire in the fast-growing Southeast Asian market. ThaiBev recently bought 26.4 percent stake in F&N, becoming their largest shareholder. In another deal, Kindest Place, owned by Charoen’s son-in-law, offered $55 per share for 7.3 percent stake in F&N. Heineken’s bid was a 45 percent premium to the price of APB shares a month earlier

For players seeking to expand their market in Asia, APB is the most correct option, with an impressive 20 percent annual earnings growth over the last decade. It offers brands like Tiger, Bintang, and Anchor, and runs 30 breweries in countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand, and Cambodia. In Asia pacific, APB is the sixth-largest in terms of sales, with San Miguel Corp of the Philippines at the top, and ThaiBev at fourth.

“Heineken wants full control of Asia Pacific Breweries Ltd. (SGX:A46), while Charoen wants a piece of that growth and is positioning himself to gain handsomely, if Heineken wants to buy him out in the future,” said an investment banking source in London.

Another major stakeholder in F&N with 15 percent stake is Japanese brewer Kirin, which have not cleared their position about the stake sale yet. But according to their CEO they are more concerned about F&N’s soft drinks business.

Shares of the two main companies in question Fraser and Neave Limited (SGX:F99) and ABP have hit record highs in recent weeks. At Thursday close APB shares were trading at S$50.57 against under S$35 in mid-July and F&N shares have risen from S$7.40 since mid-July to end at S$8.40 on Thursday. Trading of APB and F&N shares in Singapore was suspended on Friday pending an announcement.

Goldman Sachs Group, Inc. (NYSE:GS) is the advisors to F&N, while Citigroup Inc. (NYSE:C) and Credit Suisse Group AG (NYSE:CS) are advising Heineken on the deal. Morgan Stanley (NYSE:MS) and HSBC Holdings plc (LON:HSBA) (NYSE:HBC) are advising the Thai group.